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While the year 2018 has been a year of brisk activities in the Indian Real Estate sector, the
year 2019 is expected to bring in both challenging and opportunistic with upcoming elections,
changing dynamics of credit growth and focus on infrastructure improvement driving the
markets. The short term impact of elections in terms of slowdown of policy clearances and
infrastructure projects critical to real estate might affect the market sentiments, but stable
government at the Centre is expected to boost growth of the sector.
The NFDC crisis and lack of credit off take has been an area of concern for stakeholders in
the sector, but positive economic indicators with India's GDP growth rate pegged at 7.5%
and controlled inflation rate at 4.8% have kept the markets stable. The effort to continue this
momentum should be prioritized for all encompassing growths of this sector.
Last year market consolidation and adjusting to the new policy requirements became the
main focus of the development. The increased transparency, accountability and core
structural reforms have boosted ease of doing ranking of India and has created a conducive
business environment for both domestic and institutional investors. The enforcement of
RERA has phased out non serious players ensuring that only credible developers drive the
market. Further consolidation of the market is expected to continue in 2019 with established
names further capitalize on their brand.
Chairman, CIRIL
OUR SERVICES
INDIAN ECONOMY
Looking ahead with hope in 2019
According to Moody's Investment Services, economic growth of approximately 7.5%
is expected for 2019 and will remain robust. The expected growth is reflective of
strong demand for goods and services and increasing industrial activity among the
eight core sectors: coal, crude oil, natural gas, refinery products, fertilizers, steel,
cement and electricity. India is expected to be the third largest consumer economy as
its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer
behaviour and expenditure pattern, according to a Boston Consulting Group (BCG)
report; and is estimated to surpass the USA to become the second largest economy
in terms of purchasing power parity (PPP) by the year 2040.
India's gross domestic product (GDP) is expected to reach US$ 6 trillion by FY27 and
achieve upper-middle income status on the back of digitization, globalization,
favorable demographics, and reforms.
India's revenue receipts are estimated to touch Rs 28-30 trillion (US$ 385-412 billion)
by 2019, owing to the Government of India's measures to strengthen infrastructure
and reforms like demonetization and Goods and Services Tax (GST).
The World Bank has stated that private investments in India are expected to grow by
8.8 per cent in FY 2018-19 to overtake private consumption growth of 7.4 per cent,
and thereby drive the growth in India's gross domestic product (GDP) in FY 2018-19.
India is expected to retain its position as the world’s leading recipient of remittances
in 2018, with total remittances touching US$ 80 billion, according to the World Bank’s
Migration and Development Brief.
India ranks 58th, up five places from 2017 out of 140 economies, according to
the Global Competitiveness Report 2018 of the World Economic Forum. Further,
India’s rank in the World Bank’s Ease of Doing Business 2019 survey climbed 23
places to 77 among 190 countries surveyed, making it the only country to rank
among the top 10 improvers for the second consecutive year.
Modernizing public institutions have been high on the agenda of reforms in India
in recent years, and results are starting to show. The six reforms recognized in
this year’s report are starting a business, getting electricity, dealing with
construction permits, getting credit, paying taxes and trading across borders.
Market Drivers
The year 2018 was year of numerous policy In year 2019, investment scenario may
and statutory compliance for Indian Real remain slow and stable owning to the
Estate. The big bang reforms such as RERA upcoming locations. Players will remain
and GST improved the transparency and conscious about investing in new
answerability in the sector have brought ventures. Completion of existing projects
about an imperative change in the tax, will be prioritized.
regulatory and business environment,
thereby catching the attention of institutional Business models such as co-working
investors who are now looking at the Indian space have emerged as new market
real estate with renewed dynamism. segments. Overall, Commercial market
segment will continue to perform better
With affordable housing accorded than retail and residential segments in
infrastructure status and announcement of 2019. Gross office space absorption in
Credit Linked Subsidy Scheme (CLSS) has 2018 has grown by more than 20 percent
benefited both buyers and developers. In since last year owing to renewed interest
the long term, these reforms will have a from banking tenants and further
positive impact on markets. Today’s market expansion by technology companies.
is very much steady for buyers; choices are
accessible, making it a good time to Many developers plan to build affordable
capitalize on investment. housing, with residential units in the price
range of INR 1.5 – 3 mn (USD 21,000 –
The Securities and Exchange Board of India 42,000). This will target the lower and
(SEBI) has given its approval for the Real upper middle income group.
Estate Investment Trust (REIT) platform
which allows investors to invest in the Indian Overall, in 2019 the market will continue
realty industry. This would aid increase of its steady run but at a slower rate. Even
the cash flow in the sector and create with a rise in demand in most of the major
openings worth billions over the years. cities, the year-on-year price increase has
Likewise, the liberalization of the FDI norms remained low, ranging between 0 – 2%
will further improve the cash flow into the during the past years. We can expect a
sector and encourage a robust environment similar trend in the coming years.
INDIAN REAL ESTATE
Market Size
Trading
Power
Chemical (except fertilizer)
Automobile industry
Pharma
Computer (Hardware and Software)
Telecommunication
Construction
Service Sector
0 2,000 4,000 6,000 8,000 10,000
Retail Sector
Mumbai office market saw total absorption of IT-BPM continued to witness strong demand
around 4.8 mn sq. ft in the year 2018. with a 27% share. The major transactions
Leasing activity was stable across all micro- (greater than 100,000 sq. ft.) seen during
markets of Mumbai in the year 2018. Co- the quarter were Accenture in Eastern
working has emerged as a new demand Suburbs, We Work in Thane-Belapur micro
segment in Mumbai with frantic expansion by market and Google in SBD (BKC) micro
new and established players. Almost 15% of market.
the space absorption in the commercial
market are by Co-working space. Mumbai witness supply of around 3.5 mn
sq. ft in the year 2018. Demand is expected
Overall, Powai, Vikhroli, Kurla, Andheri and to improve, backed by leasing activity in
Goregaon remained a favored investment select corridors such as Thane-Belapur
destination accounting for 60% of total Road and the Malad-Goregaon stretch
absorption. Navi Mumbai and BKC, with a where a healthy supply pipeline is
15% share each, while Worli, Prabhadevi and anticipated during 2019-2020. Rental prices
CBD represented the remaining 9% of gross largely remain unchanged in 2018.
absorption.
Demand and Supply in Mumbai Rental Trends Deals in Mumbai Commercial Market in INR/sq.ft/month
Commercial market in mn sft
Area 2016 2017 H1 2018 H2 2018
6
Worli/Prabhadev 100 -190 100-180 125-190 110-190
5 Lower Parel 90-180 90-180 110-180 100-190
4 BKC 165-285 155-275 150-300 150 -300
Kalina 100-175 100-175 125-200 125-250
3
Goregaon / JVLR 90-110 90-110 80-125 80-125
2
Andheri East 70-140 70-140 60-145 60-155
1 Malad 75-100 75-100 70-120 70-120
0 Powai 120-200 125-225 110-145 110-160
2014 2015 2016 2017 2018 Navi Mumbai 40-80 40-80 40-75 40-90
There was a strong increase in demand for Major lease transaction witnessed are;
warehousing space across the Mumbai Pepper fry (260,000 sq. ft.) and Hopscotch
particularly in in Bhiwandi, Mankoli and (120,000 sq. ft.) at Bhiwandi. Jaguar
Padgha along NH 3 and State Highway 35 (125,000 sq. ft.), at Panvel, and Jindal
(SH 35). Demand for industrial space Steels (50,000 sq. ft.) at Taloja. Linde
picked up with leasing activity Group (11,000 sq. ft.) at Mahape and NRB
concentrated across the Trans Thane Bearings (20,000 sq. ft.) at Rabale.
Creek (TTC) industrial area.
Due to the strong demand levels, rental
E-commerce players and 3PL companies values increased across most micro
continued to be the prominent occupiers of markets. However, high costs of land and
warehousing space in the region, restricting in land usage (mostly in the
accounting for 70% of the total space take- green zone) have restricted the
up during 2016. Engineering and development of warehouses.
manufacturing firms and electronics
companies were other major demand Industrial and warehousing segment will
drivers. continue its robust performance in 2018.
Eccosphere Coworking Pvt. Ltd B-61 & B-70 25000 Sector-67, Noida Lease
Supply Demand
FabAlley C-5 25000 Sector-1, Noida Lease
5th & 9th Floors, Unitech
Office Beanz (Coworking) 54,000 Sector 39, Gurugram Lease
Cyber Park, Tower C
Average Rental Trends in NCR-
Delhi Commercial Market in INR/ Udyog Vihar -
Sita Aeronotics ASF Towers 70,000 Lease
4,Gurugram
sq.ft/ month
Fujifilm Unitech Cyber Park 25,000 Sector - 39, Gurugram Lease
400 Biba Capital Cyber Scape 54,000 Extn. Golf Course Road Lease
350 Tech Mahindra Capital Cyber Scape 1,25,000 Extn. Golf Course Road Lease
300 Wework (Coworking) Galaxy Hotel 1,00,000 NH-8 Lease
250 DLF Cyber City, Phase
Wework (Coworking) Forum 2,84,000 Lease
200 III
150 Mobikwik Good Earth Business Bay 35,000 Extn. Golf Course Road Lease
100 SE2 Brookfield Sez, Tikri 57,000 Sector 48 Lease
50 Innov8 (Coworking) Orchid Centre 40,000 Golf Course Road Lease
0
Institutional (IT) -…
Commercial - Sector…
Industrial (IT/ITes)-…
Institutional (Non IT)…
Institutional Sector
Udyog Vihar
Saket
National Highway 8
Golf Course Ext/ Sohra
Garage Society (Coworking) Plot No. 270 1,25,000 Phase 2, Udyog Vihar Lease
SE2 Brookfield Sez, Tikri 57,000 Sector 48 Lease
Brookfield Sez,
Cvent 90,000 Old Delhi Gurgaon Road Lease
Dundahera
Spark Minda Plot No. 404-405 30,000 Phase 3, Udyog Vihar Lease
Urbanclap Plot No. 416 35,000 Phase 3, Udyog Vihar Lease
Optimint Plot No. 270 30,000 Phase 2, Udyog Vihar Lease
Yatra.com Plot No. 272 80,000 Phase 2, Udyog Vihar Lease
NCR Delhi is one of the largest warehousing Rental values in Delhi witnessed a
nodes in India due to the presence of large growth of 5-7% during 2017 due to
consumer and manufacturing base. sustained interest from 3PL and e-
Commerce players. In notable
Leasing activity remained robust in the NCR, transaction, approx. 2,70,000 sq. ft.
with close to 3 mn sq. ft. Of modern Was leased by Flipkart at Tauru Road
warehousing space being leased across the and Hero Motor Corp leased 1,00,00
region. Demand continued to shift towards sq. ft near Jamalpur, Gurgaon
modernized Pre-engineered Building (PEB)
facilities along the NH-8 in areas such as Industrial and warehousing will be
Pataudi, Tara Road and Binola, followed by the the major demand drivers in the
industrial areas of Mundka (Delhi), Dadri Delhi NCR market with sustained
(Ghaziabad) and Greater Noida. E-commerce demand from FMCG, 3PL and e-
continues to be the main demand drivers. Commerce players.
16 160
140
14 120
12 100
80
10 60
40
8 20
0
6
4
2
0
2014 2015 2016 2017 2018
Supply Demand
2016 2017 2018
Semmenche…
(Madhya…
4
Guindy
CBD
GST Road
Ambattur
OMR I
OMR III (
OMR II
2
0
2014 2015 2016 2017 2018
Supply Demand
2015 2016 2017 2018
Chennai saw close to 2.0 mn sq. ft of leasing Industrial and warehousing, demand
Industrial and warehousing segment. Leading will continue to grow in along major
occupiers leasing space during 2018 were e- industrial and warehousing corridors
Commerce, engineering and manufacturing, and of Chennai in 2019.
3PL companies.
(Pocharam…
2
Off - CBD
(Gachibowli)
Peripheral
CBD
Peripheral
Suburban
Suburban
Suburban
(Uppal)
0
2014 2015 2016 2017 2018
Supply Demand
2015 2016 2017 2018
The Hyderabad Industrial and Warehousing Rents have remained stable across micro
market witnessed a strong increase in leasing markets. Shamshabad has emerged as a
activity in 2018 with transaction of around 1.5 preferred e-commerce destination due to
mn sq.ft. Besides a few large scale proximity to airport. The Medchal area saw
transactions, the leasing activity during 2018 appreciation of rentals due to steady
was driven by small to medium sized space demand and sustained leasing activities.
take-up by 3PL, FMCG, e-Commerce and Industrial and warehousing, demand will
pharmaceutical companies. The majority of continue to grow in along major industrial
the leasing activity was concentrated across and warehousing corridors of Hyderabad
independent warehouses.
GST reforms and political stability have
The major industrial and warehousing triggered off growth in Hyderabad
corridors in Hyderabad are Shamshabad, Industrial and warehousing markets
Mahabubnagar and Medchal. These areas and we expect this trend to continue in
have the presence of almost all major FMCG 2019
and e-retail players.
Industrial and warehousing Land rates in INR Industrial Rents Warehousing Rents
Submarkets Mn/acre INR/sft/month INR/sft/month
Jeedimetla 25-35 12 to 14 12 to 14
Gunda-Pochampally 20-30 12 to 14 12 to 14
Kandlakoya 20-30 12 to 14 10 to 12
Kompally 30-40 12 to 14 14 to 16
Bowrampet 15-30 10 to 12 10 to 12
Gajularamaram 15-30 10 to 12 10 to 12
Medchal 35-40 12 to 14 12 to 14
Turkapally 30-35 12 to 14 12 to 14
Dandupally 25-30 10 to 12 10 to 12
KOLKATA
REAL ESTATE TRENDS
Kolkata, widely regarded as the "cultural
capital" of India, enjoys a strong,
diversified economy. As of 2017, estimates
indicate that Kolkata Metropolitan Area's
economy have ranged from $60 to $150
Statistics
billion (GDP adjusted for purchasing power
parity) making it third most-productive Area 1,886.67 km2
metropolitan area in India, (728.45 sq mi)
after Mumbai and Delhi. The City is a perfect
Population 14,112,536
blend of economic strength and dynamism,
(Census 2011) 14,617,882
with a strong consumer base, vibrant
(Extended UA)
industry, large talent pool, transparent
governance and social & physical GDP (PPP) $150.1 billion
infrastructure development. The city is
home to many industrial units operated by
large public and private sector corporations.
Major sectors include steel, heavy
engineering, mining and minerals,
pharmaceuticals, food processing,
agriculture, electronics and textiles.
Prominent companies headquartered in
Kolkata are ITC Limited, Exide Industries,
Eveready Industries, RP – Sanjiv Goenka
Group, Ambuja Neotia Group, Emami, Rupa
Industries, Lux Innerwear, Berger Paints,
Birla Corporation, Manyavar, SREI, Peerless
Group, Coal India Limited, Uco Bank,
Allahabad Bank, Bandhan Bank and
Damodar Valley Corporation to name a few.
Rajarhat - PBD
1.5
AJC Bose Road)
Topsia, Ruby)
Street, Camac
New Town,
CBD (Park
1
Lake
street,
0.5
0
2014 2015 2016 2017 2018
Kolkata industrial and warehousing market The implementation of GST has made way
witnessed an appreciation of 5% -10% in most for cost and operationally efficient
micro markets due to increased demand from ‘Hub&Spoke Model’ of warehousing and is
warehousing developers/ landlords.The micro shifting from the inefficient, low quality
market of Dankuni, Dhulagarh, Sankrail and redundant warehouses to large box and
Uluberia along NH-6 witnessed close to 70% of good quality Grade A warehouses. INR 4300
overall transaction activity. Domestic Cr Investment in Warehouses Estimated for
companies from the electronics, 3PL, e- WB by 2020. however, close to 4 msf. of
Commerce and media sectors were the major space is currently under construction and is
occupiers of space. expected to be completed by 2019.
The state which had 11.6 msf of warehousing Industrial and warehousing demand will
space in the beginning of the year is set to go continue to grow in along major industrial
up by CAGR 28% with supply moving upto and warehousing corridors of Kolkata in
22msf by 2020. 2019
More than half of the new supply, 56%, Going forward, we expect 2019 to be in
constitutes non-IT developments, coming a similar situation with rentals are
onstream with rental values higher than the expected to appreciate further due to
current market average, resulting to increase supply constraints. Banking and
in average rents for most micromarkets in the Financial Services Institutions (BFSI),
city. The majority of the planned supply is flexible workspace operators and
concentrated in three micromarkets namely engineering & manufacturing
Kharadi (34%), Baner (27%) and Airport companies will continue to be market
Road/Pune Station (20%) drivers.
Bavdhan
Hinjewadi
Airport Road
Nagar Road
Kharadi
Baner
Kalyani Nagar
Aundh
0
2014 2015 2016 2017 2018
Supply Demand
2014 2015 2016 2017 2018
Ahmedabad real estate saw a limited Rentals remained stable in most micro
transaction of around 1.03 mn sq. ft of markets with price correction in few locations
commercial space in the year 2018. The due to oversupply scenario, especially in the
market remained sluggish in terms of submarkets of S.G. Highway and Satellite/
transaction activities. Grade A leasing Prahladnagar. Demand for IT-BPM, financial
activity was dominated by the banking, services, professional services firms,
financial services and insurance (BFSI) coworking operators and engineering
sector with a 50% share. The majority of the /manufacturing and industrial firms to remain
leasing activity was concentrated in the SBD active in the city’s office market. SG Highway
of S.G. Highway (55%). submarket is likely to remain most attractive
micro-market
Ahmedabad witnessed supply of approx. 3.1
mn sq. ft, in 2018. The supply addition, We Expect 2019 to be positive for the
coupled with moderate leasing activity, led commercial market with good leasing
to an increase in Grade A vacancy levels, demand & addition of new supply infusion.
which was noted at 35%. Rentals are expected to decline further
due to demand - supply mismatch.
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